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Futures Rise As Jackson Hole Looms, Dollar Slides, Bitcoin Surges

Futures Rise As Jackson Hole Looms, Dollar Slides, Bitcoin Surges

US stock-index futures gained along with global equities as concerns about…

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This article was originally published by Zero Hedge
Futures Rise As Jackson Hole Looms, Dollar Slides, Bitcoin Surges

US stock-index futures gained along with global equities as concerns about China’s crackdown faded and as investors sought to take advantage of last week’s market weakness after Dallas Federal Reserve President Robert Kaplan said on Friday he’s open to adjusting his view that the central bank should start tapering its asset-purchase program sooner rather than later if the delta variant persists and hurts economic progress. Bond yields rose as demand for havens eased. Commodities also rallied after China announced no new cases suggesting the Delta scare is ending; The dollar was weaker and Bitcoin surged above $50,000, the highest level since mid-May. At 7am ET, Emini S&P futs were up 15 points or 0.34% to 4,452; Dow futures rose 158 points or 0.45% and Nasdaq futures were 40 points higher or 0.27%.

Oil shares led the pack, as investors returned to riskier assets after a sharp selloff last week on worries about a slowing pace of U.S. economic growth. Oil majors Chevron Corp, Exxon Mobil, Schlumberger NV and Occidental Petroleum gained between 2% and 3.6% in premarket trading, tracking a 3% jump in crude prices. The S&P 500 energy sector slumped 7.3% over the past week, its worst fall since mid-July, on concerns over the outlook for fuel demand due to new coronavirus restrictions in some parts of the world. Other economy-sensitive stocks also rose, with major Wall Street banks up about 0.8%.

Boeing added 1.3% after a media report that the planmaker was planning investment in Virgin Orbit’s $3.2 billion SPAC listing. General Motors fell 2.1% after the largest U.S. automaker said it would take a $1 billion hit to expand the recall of its Chevrolet Bolt electric vehicles due to the risk of fires from the high-voltage battery pack. Walt Disney rose 0.9% after the media company raked in $125 million in online revenue from Marvel superhero film “Black Widow”.

Here are some of the biggest premarket movers:

  • Cryptocurrency-exposed stocks rise after Bitcoin topped the closely watched $50,000 level for the first time since mid-May. Ebang (EBON) climbs 7.1% and Bit Digital (BTBT) surges 6.5%, while Riot Blockchain gains 6.3%.
  • Meanwhile, Uber, Lyft and DoorDash shares fell after a California state judge struck down a ballot measure that declared drivers for the companies were independent contractors. Uber drops 3.8% and Lyft slides 4.2%, while DoorDash slips 0.6%.
  • Greenpro Capital (GRNQ) soars 33%, extending Friday’s gains, after forming a partnership to create a satellite network and services platform in Southeast Asia.
  • Robinhood (HOOD) climbs 3.3% in premarket trading as analysts across Wall Street start coverage of the commission-free trading app with mostly positive outlooks.
  • Trillium soared 228% in premarket trading after Pfizer agreed to buy Trillium Therapeutics shares it doesn’t already own for $18.50 per share in cash, helping the acquiring company strengthen its leadership in oncology. The stock already surged past the price tag for the deal, which already represented 204% premium for the clinical stage immuno-oncology company

A raft of "flash" manufacturing surveys for August out on Monday will offer an early indication of how global growth is faring in the face of the Delta variant, with analysts expecting some slippage and especially in Asia. Investor will also be looking to the Federal Reserve’s Jackson Hole (now virtual) symposium later this week, which will be scrutinized for hints on upcoming changes in stance. Traders are also preparing for a busy week of economic releases, kicked off by August PMI readings due Monday.

“Disappointing retail sales and consumer sentiment suggest the U.S. consumer is fading,” Morgan Stanley strategists led by Michael Wilson wrote in a note. “Most blame delta, but we think this is more about a payback in demand. We reiterate our defensive tilt and remain underweight discretionary and most cyclical sectors.”

On the the virus front, China once again squelched local Covid-19 cases down to zero. Australia and New Zealand are reviewing their strategies of eliminating infections. Australian Prime Minister Scott Morrison said it’s highly unlikely his country will ever return to zero cases.

The spread of the Delta variant also has the potential to upset the timing of the U.S. Federal Reserve's tapering plans, boosting stocks even higher. Dallas Fed President Robert Kaplan, a well-known hawk, on Friday said he might reconsider the need for an early start to tapering if the virus harms the economy. read more That added additional uncertainty to Fed Chair Jerome Powell's speech at Jackson Hole this week, which was moved online because of pandemic restrictions.

"Our base case is that the FOMC will announce a taper in September if the August non‑farm payrolls is strong," said Joseph Capurso, head of international economics at CBA. "We anticipate the taper will be implemented in October or November, though the recent increase in Covid infections and deaths in parts of the U.S. may give Powell pause."

That is in market contrast to the European Central Bank which is under pressure to add more stimulus, giving the dollar a leg up on the euro. "Unlike the Fed, we do not expect the ECB to shift away from its ultra‑dovish monetary policy stance," said Capurso. "We expect EUR to decline to a low of $1.12 in Q1 2022, before gradually appreciating."

And speaking of Europe, stocks on the continent rose Monday along with U.S. futures as traders took advantage of last week’s selloff. Retailers headed the advance in the Stoxx Europe 600 index after a report of a possible takeover bid for Sainsbury sent the grocer’s shares up more than 12%. European luxury stocks also rebounded, helping lift the Stoxx 600’s consumer products and services subgroup higher, along with the retail sector, paring some of last week’s declines prompted by nervousness over China’s aims to reduce its wealth disparity.  Burberry +4%, Richemont +3.9%, Kering +3.5%, Swatch +2.6%, LVMH +1.9%, Hermes +1.6%. While China is still the main engine for growth in the luxury space, “more volatility looks here to stay,” Jefferies analyst Flavio Cereda wrote in a note Friday.  Here are some of the biggest European movers today:

  • Sainsbury shares rise as much as 13% after a weekend report in the Times newspaper that private equity firm Apollo is considering a bid of more than GBP7 billion for the U.K. supermarket chain. Apollo isn’t holding talks with Sainsbury, people familiar with the matter told Bloomberg News, and the firm hasn’t hired advisers to explore a potential deal, one of them said.
  • Pearson shares gain as much as 4%, their sharpest jump since end-July, after JPMorgan upgrades the education publisher to overweight from neutral.
  • Maersk Drilling shares rise as much as 8.3%, the most intraday since Feb. 15, after DNB upgrades the firm to buy from hold, saying the magnitude of the selloff the stock suffered after its earnings was surprising. Kepler also upgrades its rating to hold from reduce.
  • Cembra Money Bank falls as much as 29%, the steepest drop on record, after the ending of a key credit card partnership with Migros that analysts expect to deal a blow to profit.
  • U-Blox shares fall, extending Friday’s 10% slump, as Kepler Cheuvreux downgrades the semiconductor device maker to reduce from hold, saying the company’s guidance cut is “disturbing.
  • Pennon shares fall as much as 4.7%, the most since July 5, after Credit Suisse downgrades the U.K. water services firm to underperform from neutral on valuation grounds.

Earlier in the session, Asian markets tried to pick up the pieces on Monday following last week's thrashing as coronavirus concerns showed little sign of abating, while safe-haven flows benefited the dollar ahead of a key update on U.S. monetary policy. While concerns over China's economy have intensified in recent weeks, with Beijing's regulatory crackdown on the tech sector delivering a double blow to markets as more than $560 billion was wiped from Hong Kong and mainland China exchanges last week, concerns about China's crackdown eased; sentiment was also boosted after Beijing announced zero new covid cases.

As a result, Asian stocks were set for their biggest gain in three weeks, led by strong rebounds in Hong Kong, Japan and Taiwan following last week's steep selloffs. The MSCI Asia Pacific Index jumped as much as 1.7%, driven by tech stocks, with almost all industry groups in the green. TSMC, Toyota and Tencent were the biggest contributors to the regional benchmark’s advance. Gains were strong across Asia Pacific, even as Beijing continued a regulatory campaign that has sent shockwaves through the region’s markets. On the coronavirus front, meanwhile, China brought its daily number of news cases back down to zero. While the crackdown and weak economic data in China contributed to last week’s Asia selloff, “both of these were well anticipated and may indeed result in more policy support,” Mixo Das, Asia equity strategist at JPMorgan Chase & Co., wrote in a note.

“Covid-19 developments are, if anything, improving on the margin in the region.” Taiwan’s Taiex led gains in the Asia Pacific, climbing almost 2.5%. Hong Kong’s benchmark bounced after plunging into a bear market last week, down more than 20% from its February high. The Topix climbed as the Japanese market recovered from its worst week in 13 months amid concerns on Toyota output cuts

Japanese stocks also rose, halting a two-day drop, as gains in U.S. shares bolstered sentiment ahead of the Jackson Hole symposium this week. The Topix index advanced 1.8% to 1,915.14 at 3 p.m. close in Tokyo, while the Nikkei 225 Stock Average climbed 1.8% to 27,494.24. Toyota Motor Corp. contributed the most to the Topix’s gain, increasing 3.4%. Shoji Hirakawa, the chief global strategist at Tokai Tokyo Research Institute, said a Yokohama mayoral election result may spur speculation the government will boost stimulus spending. Takeharu Yamanaka, a candidate nominated by Japan’s opposition Constitutional Democratic Party, won against a candidate backed by Prime Minister Yoshihide Suga, Kyodo reported. “The loss could push the administration to put forward stimulus big enough to help the economy and tackle the pandemic, which would support the stock market,” Hirakawa said

Australian shares snapped a five session of losses with the S&P/ASX 200 index rising 0.4% to close at 7,489.90, ending five straight sessions of losses. Technology and mining stocks helped lift the benchmark.  Among top performers was Charter Hall Group after the company reported FY earnings. The biggest laggard was Nib, which reported results and signaled FY22 market conditions would be similar to the past year.  In New Zealand, the S&P/NZX 50 index rose 1% to 13,064.07. Earlier, the country further extended a strict, national lockdown as the delta outbreak continues to grow.

“We do not expect much of ‘breaking news’ to come from the Jackson Hole symposium, but rather some form of relief that the policy course remains lower for longer,” said Daniel Egger, the CIO at St. Gotthard Fund Management. “There appears to be growing consensus that the Fed will tread very cautiously in this regard.”

The dip-buying suggests investors have faith in central banks to maintain stimulus amid lingering risks to the global economy, according to Bloomberg. Euro-area PMI indexes on Monday signaled a strong recovery, though factories continue struggle with supply bottlenecks and rising input costs, while the virus resurgence casts a pall on the outlook. Traders will scrutinize U.S. manufacturing, gross domestic product and jobs data this week as they wait for further guidance from the Fed at Jackson Hole.

In rates, Treasuries traded heavy ahead of this week’s issuance and as US stock futures extend gains beyond Friday’s highs. Yields were higher by up to 2.1bp across 20-year sector which lags on the curve, cheapening 10s20s30s fly by 0.8bp; 10-year yields around 1.275%, and bunds and gilts lag by ~1bp. Gains for Asian equities boosted risk sentiment overnight, while Aussie bonds weighed along with JGBs. Along with belly auctions, focus this week will include Fed’s Jackson Hole summit beginning Friday.

In FX, the Bloomberg Dollar Spot Index fell for the first day in six as commodity currencies led gains among Group-of-10 peers; Norway’s krone was the best performer as oil prices rallied. The pound held on to gains after a mixed bag of flash PMIs. The Bank of England meeting in September is now captured by one-month options and naturally the gauge rallies on a risk event, yet the daily weighting of the meeting is also higher Monday, suggesting some fresh gamma demand has emerged. Australia’s dollar climbed amid risk-on price action in stocks and commodities. The Aussie was also supported on hopes that the nation may ease virus curbs sooner as Prime Minister Scott Morrison suggested that the government’s virus strategy may shift away from totally eliminating infections.  The yen and bonds fell as market players speculate over the timing and pace of the Federal Reserve’s tapering of bond purchases.

In commodities, some of the recent weakness in commodities abated, with oil in New York pushing toward $64 a barrel. Commodity-linked currencies like the Australian dollar and South African rand strengthened. Last week oil suffered its sharpest week of losses in more than nine months as investors anticipated weakened fuel demand worldwide due to a surge in COVID-19 cases. However, some of this reversed early Monday amid hopes the Delta variant was ending; Brent jumped more than up 37 cents to $65.55 a barrel, while U.S. crude added 27 cents to $62.41. Gold was steadier at $1,777, following a one-day plunge earlier in August.

Bitcoin retook $50,000 for the first time since mid-May.

Looking at today's calendar, we get August flash manufacturing, services and composite PMIs for Australia, Japan, France, Germany, Euro Area, UK and US, Euro Area advance August consumer confidence, US July existing home sales, July Chicago Fed national activity index

Market Snapshot

  • S&P 500 futures up 0.3% to 4,448.75
  • STOXX Europe 600 up 0.3% to 470.23
  • MXAP up 1.4% to 193.55
  • MXAPJ up 1.2% to 632.22
  • Nikkei up 1.8% to 27,494.24
  • Topix up 1.8% to 1,915.14
  • Hang Seng Index up 1.0% to 25,109.59
  • Shanghai Composite up 1.5% to 3,477.13
  • Sensex up 0.5% to 55,616.24
  • Australia S&P/ASX 200 up 0.4% to 7,489.93
  • Kospi up 1.0% to 3,090.21
  • Brent Futures up 2.9% to $67.04/bbl
  • Gold spot up 0.2% to $1,784.90
  • U.S. Dollar Index down 0.24% to 93.27
  • German 10Y yield rose 3.0 bps to -0.465%
  • Euro up 0.2% to $1.1725

Top Overnight News from Bloomberg

  • Jerome Powell’s chances for a second term as Federal Reserve chair gained momentum with Treasury Secretary Janet Yellen’s endorsement, a move that would reduce uncertainty about the path for monetary policy amid risks from inflation and the delta variant
  • President Xi Jinping’s rhetoric about “common prosperity” surged this year, evidence of the Communist Party’s commitment to closing the country’s yawning wealth gap
  • The Chinese Communist Party has a new catchphrase to guide its economic policy, a “cross-cyclical” approach that government advisers say means taking action sooner, in smaller steps and with a longer time frame in mind
  • Swiss National Bank Chairman Thomas Jordan underwent a medical procedure over the weekend following a preventive check-up. The operation was successful and Jordan, is in “good condition,” the central bank said in a statement. Jordan, who has lead the SNB since 2012, will fully devote himself to official business after the medically recommended period of convalescence
  • U.K. Prime Minister Boris Johnson will push President Joe Biden to delay the departure of U.S. troops from Afghanistan beyond the end of August to allow for more and safer evacuations of foreign nationals and their Afghan staff, a person familiar with the matter said

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac bourses traded higher with the region encouraged as Bitcoin returned to the 50k level, and after last Friday's stock rebound in Europe and the US, despite the ongoing Delta variant fears and with participants looking ahead to the Jackson Hole Symposium later in the week. The ASX 200 (+0.4%) was kept afloat amid the outperformance in tech and mining names although gains were capped after Australia recently extended on its record daily infections, and following clashes between anti-lockdown protesters and police in Melbourne and Sydney. The Nikkei 225 (+1.8%) rallied at the open, helped by a more favourable currency and with the index unfazed by the Yokohama mayoral election that was won by the opposition candidate and viewed as a voter rebuke against PM Suga. The Hang Seng (+1.0%) and Shanghai Comp. (+1.5%) were both lifted with the former front running the advances among the major indices on a rebound from bear market territory, with HKEX shares boosted after it agreed to launch MSCI China A 50 Connect Index Futures and after last week’s quarterly review announcement in which the number of constituents in the Hang Seng Index will increase to 60 from 58 which boosted new additions Li Ning, Xinyi Glass, and China Merchants Bank but dragged BoCom shares which were dropped from the benchmark effective September 6th. In addition, mainland China was also buoyed after zero locally transmitted COVID cases were reported and with China’s securities regulator planning to create conditions for audit cooperation with the US, although it was also said to possibly ask Chinese companies seeking US listings to hand over data supervision to third-party firms. Finally, 10yr JGBs were lower and T-notes suffered similar losses with haven demand sapped by the broad rebound in global sentiment and amid the BoJ's absence from the market.

Top Asian News

  • India Is Said to Plan $81 Billion of Infrastructure Asset Sales
  • Asia Stocks Rise Most in Three Weeks as Hong Kong, Japan Rebound
  • Korea to Take Steps in FX, Financial Markets If Needed: Hong
  • Evergrande Shareholder Exodus Quickens as EV Unit Plunges 29%

Equities remain on a firmer footing, but the region lost momentum shortly after the cash open and following a string of mixed/disappointing Flash PMI figures. All metrics remained in expansionary territory, but the common themes were COVID-related growth slowdown concerns alongside supply/demand led price pressures. Meanwhile, the Fed’s Jackson Hole Symposium format has shifted to an online event as opposed to the initial in-person meeting – with some suggesting that this shift in format signals near-term COVID caution from policymakers. Meanwhile, US equity futures hover around the levels seen heading into the European cash open, with the RTY (+1.0%) the marked outperformer vs the ES (+0.3%), NQ (+0.3%) and the YM (+0.5%). Back to Europe, the majors see somewhat of a varying picture vs the broad-based gains seen at the open. The DAX (Unch) resides as the laggard following an overall soft German PMI release, whilst the latest German INSA poll shows the CDU/CSU and the SPD neck-and-neck – marking the worst result ever for the CDU and an unexpected comeback for the SPD. Elsewhere, the CAC (+0.7%) narrowly outperforms as luxury names rebound from last week’s selloff. In terms of sectors, Retail (+1.3%) is the standout winner as Sainsbury’s (+12%) soars on the back of PE takeover speculation, with the Times noting of potential bids in excess of GBP 7bln, with the likes of Tesco (+2.0%) also lifted in tandem. Sticking with sectors, the broader picture is a pro-cyclical one with defensives towards the bottom of the bunch. In terms of other individual movers, Prosus (+1.0%) gains on the announcement of a USD 5bln share buyback scheme. On the flip side, DAX-listed Vonovia (-1.8%) announced a public takeover for Deutsche Wohnen (-0.4%)

Top European News

  • Merkel Struggles to Wrap Up Unfinished Business With Putin
  • Gupta’s GFG in Talks With White Oak Over European Financing
  • Goldman Sachs-Backed CityFibre Nears Stake Sale: DJ
  • Vonovia Says Sweetened $22 Billion Deutsche Wohnen Bid Is Final

In FX, far from all change within the G10 ranks, but the Loonie is rebounding further and firmly from recent lows with the aid of a similar recovery in oil prices that has lifted WTI back up beyond Usd 64/brl. Indeed, Usd/Cad is currently testing support just below 1.2750 having retreated from around 1.2840 and last Friday’s peak only just shy of the 1.2950 mark, while the Greenback has reversed from best levels almost across the board with the index hovering under 92.500 within a 93.485-209 band vs 93.734 at one stage on August 20. Ahead, US National Activity Index, Markit’s flash PMIs and Existing Home Sales.

  • AUD/NZD - The Aussie and Kiwi are also regaining some composure and the former is gleaning encouragement from a rebound in iron ore and other base metal prices as well to offset a degree of the ongoing COVID-19 issues that are adversely impacting both Antipodean countries and currencies. Hence, Aud/Usd is back above 0.7150 and Nzd/Usd has reclaimed 0.6850+ status as the Aud/Nzd cross straddles 1.0450 in wake of hawkish/bullish comments from RBNZ chief economist Ha overnight. Next up for the Kiwi, Q2 retail sales.
  • CHF/EUR/GBP - All firmer vs the Buck, with the Franc pivoting 0.9150 irrespective of latest weekly Swiss sight deposit balances indicating little in the way of intervention and Eur/Chf remains relatively depressed between 1.0742-16 parameters. Meanwhile, the Euro has bounced from sub-1.1700 amidst mixed Eurozone flash PMIs and the Pound from the low 1.3600 zone following even more contrasting UK preliminary prints.
  • JPY - The major laggard against the backdrop of firmer Treasury yields and a steeper curve, as the Yen recoils through a couple of technical supports and soaks up some export offers said to be layered upwards from 110.00, including the 55 DMA and 200 HMA at 109.80 and 109.91 respectively.

In commodities, WTI and Brent front month futures remain on the front foot as optimism from the APAC session reverberated into Europe. That being said, the benchmarks have only chipped away at a fraction of last week’s losses. The fundamental landscape remains unchanged – with COVID the overarching force. On this note, Australia’s Victoria state expanded its lockdown beyond the city of Melbourne whilst New Zealand is to remain on a nationwide alert level 4 until at least midnight on Friday. Looking ahead, this week could see the release of OPEC sources heading into next week’s confab. Traders will also be cognizant of geopolitics as China, Iran, and Russia are poised to hold joint maritime exercises in the Persian Gulf late-2021/early-2022. WTI Oct’ inches towards USD 64/bbl from a base of USD 61.74/bbl, while its Brent counterpart mounts USD 67/bbl (vs low USD 64.60/bbl). Elsewhere, spot gold and silver gain as a softer Dollar keeps prices buoyed, but spot gold sees more contained trade in the run-up to this week’s Fed Jackson Hole Symposium. Meanwhile, base metals are bolstered by risk appetite and a broader rebound in commodities LME copper has reclaimed USD 9,000/t status whilst Dalian coke and coking coal hit limit up at the open, with traders also citing supply concerns arising from suspended Mongolian imports amid COVID concerns.

US Event Calendar

  • 9:45am: Aug. Markit US Manufacturing PMI, est. 62.2, prior 63.4
  • 9:45am: Aug. Markit US Composite PMI, prior 59.9
  • 9:45am: Aug. Markit US Services PMI, est. 59.2, prior 59.9
  • 10am: July Existing Home Sales MoM, est. -0.5%, prior 1.4%;

DB's Jim Reid concludes the overnight wrap

Happy Monday and hope you all had a great weekend. Here in London it was a rather wet one, which tells me we may be approaching the end of summer now, but for markets it’s likely to hotten up from here as we approachthe Jackson Hole symposium and Fed Chair Powell’s speech later in the week. On top of that, we’ve got the release of the August flash PMIs to look forward to today, which will give us an initial indication of how the global economy has fared into the month. And Covid developments will remain in focus as a number of countries grapple with a renewed wave of the virus, which was a major factor in last week’s selloff across multiple risk assets.

Indeed, those risks from Covid have already had an impact on this week’s highlight at Jackson Hole, with the Kansas City Fed saying last Friday that the symposium would be moving over to a virtual format, rather than the in-person gathering that’d been planned. Of course this is just one event, but it’s indicative of the broader shift in sentiment we’ve seen in the US over recent weeks as the virus has surged once again, with the University of Michigan’s preliminary consumer sentiment index for August having fallen to its lowest level in nearly a decade.

In terms of what to expect at Jackson Hole, the big question is what Powell might say about a potential timeline for when the Fed could begin to taper their asset purchases, so all eyes will be on whether he gives any hints about that. The focus on that for the coming months has been heightened after the July FOMC minutes said that “most participants” thought that “it could be appropriate to start reducing the pace of asset purchases this year”, so long as the economy evolved broadly as expected. However, our US economists are of the view that Powell’s speech on Friday will largely mirror his remarks at the press conference following the July FOMC meeting, as well as in the minutes, and so are not expecting a strong signal with respect to the Fed’s next gathering in September. Their view is instead that a tapering announcement is likely to come at the following meeting in early November. Separately, they’re also expecting Powell will emphasise the point from the minutes that there isn’t a mechanical link regarding the timing of tapering and any hikes in the federal funds rate, as well as to reiterate the transitory narrative when it comes to inflation.

Staying on the Fed, over the weekend we had a potentially significant piece of news on the central bank’s leadership from Blomberg, who reported that Treasury Secretary and former Fed Chair Yellen had told senior White House advisors that she was in favour of reappointing Chair Powell for a second term. The people cited in the article said that President Biden was likely to make his decision around Labor Day (September 6), but was yet to make one yet. Powell’s four-year term comes to an end this February, so assuming the decision is anything like the last couple of timelines, we should likely hear an announcement before the end of the year on this, with the Senate required to confirm whoever’s nominated. As a reminder, DB’s global head of economic research, Peter Hooper, put out a note a couple of weeks back (link here) making the case for why Powell’s reappointment had a high probability.

This morning in Asia, equity markets have started the week on the front foot after last week’s declines, with the Nikkei (+1.68%), Hang Seng (+1.84%), Shanghai Comp (+1.00%) and Kospi (+1.46%) all advancing. Elsewhere, futures on the S&P 500 are up +0.36% while yields on 10y USTs have risen +1.4bps to 1.270%. Commodities are also staging something of a recovery, with WTI and Brent crude oil prices up +1.75% and +1.84% respectively, having just experienced their worst weekly performance of 2021 so far.

On the pandemic, there have been further concerning developments from Australia and New Zealand over the weekend as they both face a major surge in cases that have raised questions about the sustainability of their zero-Covid strategies. In New Zealand, the total number of community cases connected to the latest outbreak now stands at 107, with a further 35 cases reported this morning, and Prime Minister Ardern said that the nationwide lockdown would be extended until midnight on Friday, with Auckland’s extended until midnight on August 31. Meanwhile in Australia, Prime Minister Scott Morrison has said it was “highly unlikely” that the country will get back to a zero-Covid situation and a further 818 new cases were reported in New South Wales over the last 24 hours.

At the global level, we’ve now had 9 consecutive weeks of rising cases, according to data from John Hopkins University, though the one slither of good news is that the rate of increase has been slowing down for the last 3, so if that’s maintained we could soon be past the worst of this current wave. As mentioned at the top though, the US is facing a deteriorating situation and has begun to record more than 1,000 daily deaths again for the first time since March, which marks a big shift from the situation in June, where cases were at their lowest since March 2020. Separately, the New York Times reported over the weekend that the FDA are aiming to give full approval for the Pfizer vaccine today, with the vaccine having been used in the US so far on an emergency authorisation.

With the delta variant continuing to spread, the flash PMIs for August today will help us work out the extent of the impact on the global economy. Overnight we’ve already had the releases from Japan and Australia with Japan’s composite reading falling to 45.9 from 48.8 last month as the Covid restrictions got expanded to more regions. And as we’ve seen in the past, much of that decline came from a drop in the services PMI (at 43.5 vs. 47.4 last month), whereas manufacturing was relatively stable at 52.4 (vs. 53.0 last month). Australia’s composite PMI was also in contractionary territory at 43.3 (vs. 44.2 last month) as amidst a worsening Covid situation there as well. The numbers from the US and Europe will be out later on, though the US composite PMI has already been edging down for a couple of months now, coming in at 59.9 in July, which is still strong but some way beneath the 68.7 reading back in May.

In the political sphere, there are now less than 5 weeks to go until the federal election in Germany, which will come into increasing focus over the month ahead given the implications for EU as well as domestic policy. Moreover, with Chancellor Merkel standing down, there’ll be a change in the country’s leadership regardless of who forms a coalition. Over the weekend there were further indications that the race is tightening up, with an INSA poll showing Merkel’s CDU/CSU bloc tied with the centre-left SPD on 22% each. That’s the first time that the SPD have been in (joint) first place in an opinion poll since back in early 2017 when they got a temporary bounce after selecting Martin Schulz as their chancellor candidate. It’s also a reasonably marked shift from the previous week’s INSA poll when the CDU/CSU led the SPD by 25% to 20%, and fits into the broader pattern of strengthening support for the SPD in recent weeks. However, the Greens slipped back further onto 17%, which echoes other polls putting them in third place around the high-teens recently, and is a big drop back from the spring when they briefly were polling in first place in the high-20s.

Elsewhere on the political scene, it’ll be worth watching out for what’s happening in the US, as the House of Representatives returns from their summer recess today with Democrats seeking to pass their economic agenda into law. As a reminder, that includes a $3.5tn reconciliation bill, along with the bipartisan infrastructure package that the Senate has already passed. However, 9 moderate House Democrats have said they won’t pass the reconciliation bill unless there’s a vote on the infrastructure bill first, whilst those on the progressive wing have said they won’t vote for the infrastructure package without the reconciliation bill. So how this plays out over the coming days and weeks could have big implications as to how much new spending gets passed.

Recapping last week now, there was a clear theme for each of the first four days of risk assets sagging – led by cyclical equities and commodities – and havens gaining. However, there was something of a reversal on Friday as the S&P 500 recorded a +0.81% gain that pared back the index’s losses to just -0.59% on the week. Amidst the decline in risk appetite, commodities also suffered significantly, with Bloomberg’s Commodity Spot index down every day last week as it fell to its worst week since mid-June, with a -4.21% loss (-0.82% Friday). Oil prices fell in particular as ongoing delta variant concerns weighed on the demand outlook, and both WTI (-8.94%) and Brent (-7.66%) witnessed their worst weekly performance of 2021 so far. Elsewhere, the industrial bellwether of copper fell -5.80%, though the classic safe-haven of gold was just better than flat on the week (+0.08%).

Back in equity markets, Europe’s STOXX 600 saw a better Friday (+0.33%) as well, but was still down -1.48% for the week as a whole, with the CAC 40 (-3.91%) and FTSE MIB (-2.76%) noticeably underperforming. Meanwhile in Asia, ongoing headlines about Chinese regulation coupled with slowing economic data saw equity indices decline across the region, with the Nikkei (-3.45%) and the Shanghai Composite (-2.53%) losing ground over the week. That left the two indices down -1.6% and -1.3% on an YTD basis respectively, while the Hang Seng (-5.84% last week) was over -8% lower on the year.

With equities falling back, sovereign bonds gained on either side of the Atlantic. US 10yr Treasury yields were -2.2bps lower at 1.255%, with real yields not increasing (+9.6bps) enough to overcome softening inflation expectations (-11.8bps). In fact, US 10yr breakevens fell to their lowest levels since early July and are -30bps lower than they closed in mid-May, following the first big upside surprise in CPI. In Europe, 10yr bunds saw yields fall a similar -2.8bps, though peripheral spreads widened somewhat, with Italian (+2.8bps) and Spanish (+2.1bps) 10yr yields both widening over bunds.

 

 

Tyler Durden Mon, 08/23/2021 - 07:49

Economics

Teck Resources’ Investor Day Shines Light on Long-Term Resilience of Steelmaking Coal

Source: Peter Epstein for Streetwise Reports   09/24/2021

Teck Resources, a CA$26 billion company, is the 2nd largest steelmaking coal producer…

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Source: Peter Epstein for Streetwise Reports   09/24/2021

Teck Resources, a CA$26 billion company, is the 2nd largest steelmaking coal producer in the world. In its Investor Day presentation earlier this week it reiterated the long-term strength of the seaborne coking coal market. Colonial Coal is also 100% coking coal, with two valuable projects for sale in B.C., Canada.

On September 21st copper, zinc & steelmaking coal producer Teck Resources Ltd. (TECK:TSX; TECK:NYSE) held its annual investor day, a three-hour webcast highlighting very robust global demand for steel and the small number of critical materials essential in making it.

"However, steel is absolutely essential in building the very renewable power plants & electrified transportation systems the world needs to decarbonize."

 

 

 

 

Teck is the 2nd largest coking (metallurgical / met) coal producer in the world behind BHP. Anglo American is #3.

 

Teck’s investor day had been anxiously anticipated. A week earlier there was a rumor that the Company wanted to divest its steelmaking coal business due in part to (as per the rumor) pressure from shareholders & prospective investors calling for companies to dump coal.

A key takeaway from the event was that seaborne met coal (Teck’s specialty) will remain in high demand as several Asian countries, especially India, are building a substantial number of blast furnaces that can only be supplied by exporters like BHP, Teck & Anglo.

There’s no doubt that burning coal, be it thermal (used to generate electricity) or met (to make steel) is bad for the environment, producing greenhouse gases that are warming the planet.

However, steel is absolutely essential in building the very renewable power plants & electrified transportation systems the world needs to decarbonize.

In assessing steelmaking coal’s role in global warming it’s imperative that we separate it from thermal coal. Thermal coal is already being fazed out — readily & cost-effectively — replaceable by nuclear, hydro, wind, solar, biomass, and geothermal sources.

Teck is a prime beneficiary of thermal coal’s demise. According to steelmaker ArcelorMittal’s website,

Each new MW of solar power requires 35 to 45 metric tonnes of steel. Each MW of wind power requires 120 to 180 tonnes. Utility-scale wind farms typically produce a 100 to 300 MW, and up to 1,000 MW. ” Annually, hundreds — eventually thousands — of giant wind farms will be installed.

Steelmakers have been trying to diminish the power that met coal, coke & iron ore producers hold by finding alternatives to blast furnace steel fabrication. That initiative has only grown with increased environmental concerns. Yet, 70% of steel still comes from 20th century blast furnaces.

New technologies are on drawing boards, but none are expected to make meaningful inroads anytime soon. New methods have their own carbon footprints to contend with. Instead, new technology is being deployed at the steel plant level.

 

teck

Carbon capture and other methods (such as the advent of Li-ion battery powered container ships) offer no silver bullets, but they’re reasonably affordable & fairly effective. Unsurprisingly, Teck is a big fan of carbon capture & fossil-free shipping!

Tens of trillions of dollars in debt-fueled economic stimulus packages in the 2020s alone will buy a staggering amount of steel, which will continue to consume vast amounts of met coal. There’s no practical, large-scale substitute.

"Teck is a big fan of carbon capture & fossil-free shipping."

Although I believe met coal should be given more slack, some good projects will, inevitably, fail to get funded or die on the permitting vine. This suggests that met coal prices are likely to remain stronger for longer. Teck forecasts the potential of a meaningful deficit in the seaborne market from 2025-2030.

According to Teck’s presentation, the 10-year avg. inflation-adj. met coal price is ~$180/Metric tonne (“Mt”). Fastmarkets lists four hard (and premium hard) met coals ranging in price from ~$336 to $601/Mt (Sept. 22nd), and averaging $475/Mt. That average price has quadrupled from its 2020 low!

teck

Will prices in the next 10 years average $180/Mt? No, my guess is prices might return to $225-$275/Mt.However, can steelmakers take the chance of multi-yr. stretches of $300-$400/Mt pricing? Vertical integration into met coal is a move that all steelmakers should seriously be considering.

Teck’s trailing 12-yr. normalized (adjusted) annual EBITDA {from presentation slides} is $2.2 billion. At a “new normal” avg. long-term met coal price of say $240/Mt, EBITDA would be closer to $2.95 billion = CA$3.75 billion.

In my view, the valuation of Teck’s steelmaking coal biz. in today’s bull market is > CA$12 billion. If a robust bidding war were to break out, with prices at, or near, all-time highs, I believe the transaction value could surpass CA$16 billion

Which other steelmaking material companies might be poised to benefit from Teck’s bullish vision of the future? One seemingly undervalued company is Colonial Coal International Corp. (CAD:TSX.V).

Colonial has two 100%-owned, PEA-stage met coal projects in B.C. Canada. One borders Teck’s Quintette project, the other is sandwiched between two of Anglo American’s projects. While Teck has met coal reserves of ~800M Mt, all in B.C., Colonial has resources (not reserves) of 695M Mt.

The Huguenot project is ~620 km north-northeast of Vancouver, close to the boundary with Alberta. Huguenot’s PEA contemplates an open-pit only scenario; 27-yr. mine life @ 2.7M Mt/yr., at a cost of ~US$110.4/Mt & upfront cap-ex of US$303M. At current met coal prices, I estimate 2.7M Mt/yr. could generate ~CA$775M/yr. in EBITDA.

Colonial’s other project, Gordon Creek, is planned as an underground mine; 30-yr. life @ 1.9M Mt/yr., at a cost of ~US$81/Mt & upfront capital of US$300M. At current met & PCI coal prices, I estimate 1.9M Mt/yr. could generate ~CA$504M/yr. in EBITDA.

teck

Therefore, combined EBITDA could be ~CA$1.3 billion/yr. (at currently sky-high pricing). Having said that, it would likely take a buyer at least five years to approach full-scale production.

Assuming a 40% retreat in pricing, annual EBITDA would still be ~CA$774M. If one applies a 4x EBITDA multiple on that CA$774M, the indicative future value of Colonial could be ~CA$3.1 billion, (less CA$766m in initial cap-ex), equals $2.33 billion.

Discounting that figure back five years at 8%/yr., nets ~CA$1.6 billion.

I believe a well-funded steelmaker, miner, commodity trader or OEM could afford CA$1.5-$2.0 billion for Colonial’s 695M resource tonnes.

Colonial is run by experts in met coal & in mining, and by people with meaningful work experience in western Canada. For the past two years, the Company has been engaged in a process to divest one or both of Huguenot / Gordon Creek. They’ve retained a number of investment bankers to assist.

Soon after the sales process began, COVID-19 struck. India had a particularly difficult time, and Indian groups are thought to be among the most interested in Colonial’s assets. Indians, along with Chinese, Japanese, Australian, Korean, Russian, Canadian & American groups!

 

"[The] first bid will refocus everyone’s eyes on the size of the prize."

Understandably, COVID-19 has slowed the sales process considerably. In my opinion, it might still take months before one or both projects are sold. However, an opening indication of interest, a bid, even a “stink bid,” could come at any time. That first bid will refocus everyone’s eyes on the size of the prize.

 

teck

It seems odd that with Colonial trading at CA$1.05/shr., a suitor’s bid of say US$0.75 per resource tonne — considered by most to be too low — could vault the share price above CA$3/shr.

Colonial has 183.4M fully-diluted shares, no debt & ~CA$6M of fully-diluted cash. The Company is valued in the market @ US$0.21 per resource tonne.

Some shareholders are quick to point to comparable transactions and record high met coal prices to suggest > US$2-$4/Mt in the ground is called for. That’s certainly possible, but to be prudent, readers should not base investment decisions on best case scenarios. US$1.50/Mt equates to CA$7.25/shr. (NOT a price target)

Some of the same buyers from 2011-12, but significantly more steelmakers, coal / copper / iron ore miners, commodity trading firms (like Mitsui, Mitsubishi & Glencore), and perhaps even large automakers — are watching Colonial. Perhaps it’s time for giant Indian & Chinese thermal coal-heavy players to diversify into met?

There are only a handful of high-quality met coal resources of this size (695M Mt in total) anywhere in the world, no less in a great mining / met coal jurisdiction like B.C. Canada, and actively for sale.

It might be unwise for a Major steel company to allow Colonial’s projects to be sold too cheaply to a competitor, possibly giving that competitor a meaningful, long-term cost advantage.

"Retail investors have a rare opportunity."

teck

Retail investors have a rare opportunity. Trading volume is not consistently large enough to allow institutions to build multi-million share positions. But, investors looking for thousands of shares can get it done.

Make no mistake, an investment in Colonial’s stock offers a high-risk, high-reward, high share price volatility proposition. Readers are reminded not to invest more than they can afford to lose.

If one agrees that poor trading liquidity, the drawn out sales process (largely due to COVID-19), and the word COAL in the Company’s name might be driving significant undervaluation, then it’s time to take a closer look at Colonial Coal.

teck

 

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.

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Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Teck Resources and Colonial Coal International Corp., including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

The author, Peter Epstein of Epstein Research [ER] has no current or prior business or personal connection with any mgmt. or board member of Colonial Coal, nor does he or [ER] have any prior or current business relationship with the Company. Mr. Epstein owns shares of Colonial Coal, obtained in the U.S. market, via open market purchases. Mr. Epstein may buy or sell shares in the Company at any time.

Mr. Epstein is not currently, and never was, an investment advisor, stock broker, agent, legal advisor or investment professional of any kind. Nothing contained in the above article should be taken as advice or as an offer to buy or sell any security. All facts & figures, incl. commentary on indicative company valuations are believed to be somewhat accurate & reasonable, but might not be — therefore they are for illustrative purposes only. Facts & figures / calculations / valuations, etc. should not be relied upon without further investigation by investment professionals. Mr. Epstein is not providing any share price guidance or buy/sell recommendation. Mr. Epstein may or may not write about Colonial Coal in the future. He & [ER] are under no obligation to update readers going forward. The shares of Colonial Coal represent a high-risk investment opportunity that may, or may not, be suitable for readers. As such, readers are urged to consult with their own investment advisors before making investment decisions.

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
1) Peter Epstein's disclosures are listed above.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.  

 

( Companies Mentioned: CAD:TSX.V, TECK:TSX; TECK:NYSE, )

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Energy & Critical Metals

Why This Uranium Junior With Projects in Argentina Deserves Consideration by Investors

Source: Streetwise Reports   09/24/2021

Blue Sky Uranium has "low-cost extraction prospects and local market opportunities in a market with…

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Source: Streetwise Reports   09/24/2021

Blue Sky Uranium has "low-cost extraction prospects and local market opportunities in a market with high growth potential," a Globe Small Cap Research report noted.

With changing perceptions of nuclear energy in recent years, you could say that uranium is having a bit of a moment.

In keeping with the trend, Globe Small Cap Research concluded that Blue Sky Uranium Corp. (BSK:TSX.V; BKUCF:OTCQB; MAL2:FSE) is "worthy of active consideration and ongoing following for developments," according to a September 2021 research report.

The research firm provided an overview of the Canadian uranium company and the opportunity before it.

Globe Small Cap explained that Blue Sky Uranium is currently "proving the reserves, organizing operations and markets and devising plans to enter production" at its Amarillo Grande project, one of its two major mining areas in Argentina. To date, the company has made three discoveries at Amarillo Grande: Anit, Santa Barbara and, most recently, Ivana.

"Ultimately ... the world will increasingly rely on the uranium market, which means greater opportunity for Blue Sky."

 

The research firm highlighted that Blue Sky could produce uranium at relatively low costs at Ivana, a deposit the company estimates contains about 23,000,000 pounds (23 Mlb) of uranium and 12 Mlb of vanadium). Thus, Blue Sky intends to develop three prospective targets at Ivana: Ivana West, Ivana North and Ivana Central.

Because the uranium ore in those areas there sits about 25 meters below surface and in loose sand and gravel, drilling or blasting will not be needed to extract it, keeping down costs. Metallurgical testing has shown that initial processing of ore from Ivana is simple, thus, also lower in cost. Also, Ivana is close to a town, airport and seaport, so taking its product to market will not be costly either.

"The geology of the area is very similar to several of the most productive uranium mining operations in the world, located in Kazakhstan," wrote Globe Small Cap. "Mines in particular areas of Kazakhstan are able to extract uranium at below US$30 per pound, placing such operations in the bottom 25% of producers on a cost per pound basis."

During the summer, Globe Small Cap reported, the uranium company finished the first phase of its 4,500 meter drill program at Ivana. Results are pending but expected to expand the Amarillo Grande project. Blue Sky will use the data to identify areas of higher uranium concentration in the current drill area.

Globe Small Cap also pointed out that Blue Sky offers additional upside with its other potentially mineable target areas, including Ivana North and Ivana Central. The company is obtaining permits to drill at Ivana East and Cateo Cuatro. Further, drilling in 2017 showed a significant vanadium deposit present at Anit and potential mineralization as indicated by radiometric anomalies at Santa Barbara.

"The opportunity for Blue Sky in terms of vanadium production is significant in Argentina."

Also, the opportunity for Blue Sky in terms of vanadium production is significant in Argentina, as the country imports 100% of this metal. Vanadium demand by the steel industry, in which the metal is used as a strengthener, is increasing.

Also, Blue Sky has a second main uranium mining area in Argentina. In the Chubut province, it encompasses the Sierra Colonia, Tierras Coloradas, and Cerro Parva projects.

Globe Small Cap purported that global macroenvironmental factors are such that a uranium supply shortage is on the horizon. The OECD Nuclear Energy Agency and the International Atomic Energy Agency Project recently wrote in their "Red Book" that the world's need for uranium will increase 75% by 2040.

The impending supply-demand imbalance will be driven, Globe Small Cap Research wrote, by the world's expected increase in the use of nuclear power as more and more policymakers realize the industrial world needs it to deal with climate change. Already there are signs around the world of this shift in thinking, such as in Japan, which restarted several nuclear programs; in France, which is rethinking its nuclear power plant terminations; and in China, which is ramping up its addition of new nuclear power plants.

Ultimately, with this changing mindset, the world will increasingly rely on the uranium market, which means greater opportunity for Blue Sky and other uranium mining companies.

As for Argentina, the location of Blue Sky's projects, it does not have a domestic uranium supply and thus needs local, low-cost producers to supply its growing nuclear market. Blue Sky already is positioned to help meet that need, as it not only has projects in the country but also connections to the Argentine nuclear and steel industries and the South American mining industry.

"Blue Sky’s Amarillo Grande project in Rio Negro appears to be the first low-cost domestic uranium supplier in a position to take advantage of this opportunity," Globe Small Cap wrote.

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Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Blue Sky Uranium. Click here for important disclosures about sponsor fees. 
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Blue Sky Uranium, a company mentioned in this article.

Disclosures from Globe Small Cap Research, Blue Sky Uranium Corp., Sept. 2021

We do not own these shares and have no plans to acquire, purchase, sell, trade or transfer these shares in any manner at any time.

We have no association with anyone, or any group, with any plan to acquire, purchase, sell, trade or transfer these shares.

Any opinions we may offer about the Company are solely our own, and are made in reliance upon our rights under the First Amendment to the U.S. Constitution, and are provided solely for the general opinionated discussion of our readers. Our opinions should not be considered to be complete, precise, accurate, or current investment advice. Such information and the opinions expressed are subject to change without notice. Separate from the factual content of our articles about the Company, we may from time to time include our own opinions about the Company, its business, markets and opportunities.

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. We did not make an independent investigation or inquiry as to the accuracy of any information published by the Company, or other firms. The author relied solely upon information published by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Statements herein may contain forward-looking statements and are subject to significant risks and uncertainties affecting results.

This report or article is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed. This publication does not take into account the investment objectives, financial situation, or particular needs of any particular person. This publication does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. We are not registered as a securities broker-dealer or an investment adviser with FINRA, the U.S. Securities and Exchange Commission or with any state
securities regulatory authority.

ALL INFORMATION IN THIS REPORT IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.


Information, opinions, or recommendations contained in this report are submitted solely for informational purposes.

The information used in statements of fact made has been obtained from sources considered reliable, but we neither guarantee nor represent their completeness or accuracy. Such information and the opinions expressed are subject to change without notice. This research report is not intended as an offering or a solicitation of any offer to buy or sell
the securities mentioned or discussed. The firm, its principles, or the assigned analyst may or may not own or trade shares, options, or warrants of this covered Company. We have received compensation of $2,500 by a third party to cover out distribution and production of this report. If additional compensation is received, future version of the
report will be updated to reflect this compensation.

Globe Small Cap Research has not in the past received compensation for the production of previous reports. The party responsible for the production of this report owns no
common stock and/or warrants in the subject Company, in any way, shape, or form. The views expressed in this research Company report accurately reflect the analyst’s personal views about any or all of the subject securities or issuers referred to in this Company report, and no part of the analyst’s or the firm’s compensation was, or will be directly or indirectly related to the specific recommendation or views expressed in this report. Opinions expressed herein reflect the opinion of Globe Small Cap Research and are subject to change without notice.

We claim no responsibility to update the information contained in this report. Investors should consider the suitability of any particular investment based on their ability to accept certain levels of risk, and should not rely solely on this report for information pertaining to the Company covered. We can be contacted at info@globesmallcap.com.

( Companies Mentioned: BSK:TSX.V; BKUCF:OTCQB; MAL2:FSE, )

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Articles

Canadian Explorer Again Employs Partnering Strategy to Create Shareholder Value

Source: Streetwise Reports   09/24/2021

Kenorland Minerals options up to 80% of its South Uchi project in Alaska, one of the company’s eight…

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Source: Streetwise Reports   09/24/2021

Kenorland Minerals options up to 80% of its South Uchi project in Alaska, one of the company's eight assets, to mining major, Barrick Gold.

One of the ways that Kenorland Minerals Ltd. (KLD:TSX.V; 3WQO:FSE) creates value for shareholders is through partnerships with other mining companies for funding and exploration assistance, all to advance its projects.

The Canadian minerals explorer again just employed that strategy in that it partnered with and optioned its South Uchi gold project in Alaska to gold-copper major, Barrick Gold Corp. (ABX:TSX; GOLD:NYSE).

Kenorland granted Barrick the option to earn up to an 80% stake in its South Uchi project, as announced in a recent news release. To earn an initial 70% interest, Barrick must spend $6 million on mineral exploration at South Uchi in six years' time.

"The company is well funded."

 

 

Subsequently, the two companies will form a joint venture, if desired. If formed, Barrick then may earn the additional 10% by funding a feasibility study by the 10th anniversary of the option agreement.

South Uchi is one of Kenorland's pipeline projects and its only asset in Ontario, Canada. The 65,657 hectare property, in the Birch-Uchi Greenstone Belt in northwestern Ontario's prolific Red Lake District, boasts gold and lithium deposits.

The Vancouver, British Columbia-based company's other seven projects are in Alaska and Quebec, four of which involve partners.

They are:

 

In Alaska

Healy (gold/flagship): optioned from Newmont Corp. for up to a 70% stake

Tanacross  (copper, gold, molybdenum/flagship): 100% owned

 

In Quebec

Frotet (gold/flagship): optioned to Sumitomo Metal Mining for up to an 80% stake

Chicobi (gold/pipeline): optioned to Sumitomo Metal Mining for up to a 51% stake

Chebistuan (gold/pipeline): optioned to Newmont Corp. for up to an 80% stake

O'Sullivan (gold/pipeline): 100% owned

Hunter (gold/pipeline): 100% owned

 

Of Kenorland's roughly 400,000 hectares of cumulative minerals rights, some are in Manitoba, but the company currently does not have a project there.

"The 65,657 hectare property ... boasts gold and lithium deposits."

A second way this exploration company creates shareholder value is by making metals discoveries through large-scale but systematic, early-stage exploration. As such, work is currently being done at several projects simultaneously, all located in geologically prospective mining jurisdictions, and the company is well funded.

Already this approach has paid off, as Kenorland, through its joint venture partnership with Sumitomo, made a gold discovery at Frotet in 2020.

Continue to watch this space for any new developments.

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Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Kenorland Minerals Ltd. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Kenorland Minerals Ltd. and Barrick Gold Corp., a company mentioned in this article.

( Companies Mentioned: ABX:TSX; GOLD:NYSE, KLD:TSX.V; 3WQO:FSE, )

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